Singapore plans to expand its vaults, targeting foreign central banks' gold reserves

Ask AI · Why is Singapore choosing to expand its gold custody services now?

The Monetary Authority of Singapore (MAS) announced that it will provide custody services for foreign central banks and sovereign entities, while strengthening over-the-counter clearing and price discovery mechanisms to boost the region’s influence in gold.

Singapore is also planning to expand its gold storage facilities, with the goal of becoming a custodian for gold bars held by foreign central banks—one of the broader initiatives the country is undertaking to compete for its position as a regional precious metals hub.

The Monetary Authority of Singapore said Friday that it will seek “vault custody services for foreign central banks and sovereign entities to meet potential demand.” The agency is also developing “capital market products related to gold, to promote price discovery and build liquidity.”

In addition, according to a joint statement from MAS and the Singapore Bullion Market Association, MAS plans to set up a clearing system to support settlement for local over-the-counter gold trading.

After investors seek alternative ways to preserve wealth and push gold prices into a historic rally, Singapore is determined to become a major global gold trading center. Although gold prices have pulled back since the outbreak of the Middle East war, central banks in multiple countries have continued to increase their gold holdings in recent years to hedge risks stemming from the U.S. dollar’s dominance.

As part of the推进计划, the Singapore government has formed a task force with members including JPMorgan Chase, UBS, as well as DBS Bank, Standard Chartered Bank, and Industrial and Commercial Bank of China. Bloomberg News reported on this plan earlier in March first.

Central banks hold 18% of the world’s above-ground gold total

Attracting central banks to set up operations would be a key component of Singapore’s plan—central banks hold massive gold reserves, making them the ultimate providers of liquidity; meanwhile, the plan also depends on support from long-established financial institutions that act as market makers. Together, they form the pillars of the globally dominant gold trading center—London, where daily gold trading volume reaches billions of dollars.

Data from the World Gold Council shows that central banks around the world collectively hold nearly 39,000 metric tons of gold bars, representing about 18% of all gold mined historically. Even occupying only a small share of this market would increase Singapore’s influence in regional trade. At present, regional trade is dominated by Hong Kong, which serves as the gateway for precious metals imports and exports for mainland China, the world’s largest gold-consuming country.

At a Friday briefing, Chee Hong Tat, Vice Chairman of MAS and also Minister for National Development of Singapore, told reporters: “The market space is big enough that we can coexist, and both cities can develop their respective service businesses.” He said that central banks and investors “see gold as an asset that can help in a more uncertain environment.”

Singapore’s plan is expected to attract countries that question the traditional hubs and credibility of places like London and New York. For security reasons, multiple countries—including Germany—have repatriated their gold. Poland, the Netherlands, and Serbia have taken similar actions as well.

MAS data shows that as of January, Singapore’s gold reserves were 193.6 metric tons.